Trump wants to strike the biggest trade deal ever done with China, potentially bundling rare earths, chips, military cooperation, and defense-spending cuts, not just tariff rebalancing.
Brad Gerstner predicts a major US-China deal before year end, citing Trump's stated willingness to halve defense budgets for the US, China, and Russia as evidence of an unusually flexible negotiating posture that could extend beyond trade into military cooperation. ✦ AI generated
Brad Gerstner · BG2 Pod · 2025-07-31 · original ↗
starts at this moment · 60:10
“We still have a big thing looming with a China discussion, correct?”
The president said earlier this year something that caught all of our attention. He said, 'You know, if I could wave a magic wand, I would cut the defense budget in half for the United States, for China, and for Russia.' We've never heard a US president in history utter anything like that... I think it could include all of the above. Rare earth chips, maybe even military cooperation, certainly a rebalancing of trade.
verbatim transcript · starts at 60:10
60:10this. The president said earlier this year something that caught all of our attention. He said, "You know, if I could wave a magic wand, I would cut the defense budget in half for the United States, for China, and for Russia." We've never heard a US president in history utter anything like that. >> Be amazing. That is a what I would call an extraordinarily flexible mindset. And if you go into this deal negotiation
60:38with China with that sort of flexible mindset, I think it could include all of the above. Rare earth chips, maybe even military cooperation, certainly a rebalancing of trade. I think China's, Listen, we entered the year with China paying 15% in tariffs. That was pre-Trump. They were paying 15% to the United States in tariffs. So I don't think we're going below 15%. I think they're going to pay
61:02>> that in in Trump for >> Trump won and Trump won, right? So I think that they will continue to pay at least 15%, but I think it's going to be much more structured, much more nuanced. You know, Besson's been very clear China has to rebalance to domestic consumption and away from an export economy that's really uh sticking it to the US in terms of the trades def trade deficit. I think
61:26China gets that. I think they want that for their own country. I think they're willing to do that. I think the United States understands that can't happen overnight. It has to happen over a period of years. I think that there's going to be a big Chinese deal done before the year's out. >> So So let let's close with this, Brad. You've you've often on the pod um been
61:45willing to speak about your your own temperature for the US markets and and and where you whether you're net long or net short. and you >> you've on this podcast been more enthusiastic than I've ever seen you both about uh about AI, but but this this China theory that you have, I think, would would cause the markets to rip, if you're correct. Um, but you also said we're at all-time highs, you know,